Use of electronic food stamps rises, but USDA faces tough challenges

An increasing number of states are moving to electronically issued food stamps but the lack of interoperable systems among states is challenging the widespread use of the debit-like cards.

Mary Ann Keeffe acting undersecretary for food nutrition and consumer services at the Agriculture Department told a House subcommittee last week that the percentage of food stamps electronically delivered to states has increased from about 2 percent in 1993 to 16 percent.

Currently eight states operate statewide electronic benefits transfer (EBT) systems to deliver the federal/state food stamp program: Kansas Maryland New Mexico North Dakota South Carolina South Dakota Texas and Utah.

"By the end of this fiscal year we anticipate that 25 states will have operational EBT systems representing 30 percent of the total food stamp benefits delivered " Keeffe told the House Agriculture Subcommittee on Department Operations Nutrition and Foreign Agriculture.

State and local governments prefer EBT delivery because it provides increased fraud detection reduced paperwork and increased security benefits for recipients. EBT is used to deliver food stamps and benefits for Temporary Assistance for Needy Families and in some cases child support and Medicaid among others.

The welfare reform law enacted last year requires all states to use EBT to deliver food stamps by 2002. "It is the only state-administered needs-tested benefit required by law to be delivered through EBT " said Ronald Spendal who was testifying on behalf of the American Public Welfare Association and is a manager with the Oregon Department of Hu-man Services. The goal is to have one card that works in every state.

EBT systems capture data such as the dollar amount of goods purchased by food stamps what time the purchase occurred at which register and the store's food stamp account number. EBT cards are similar to commercially available debit cards. About 197 000 stores are authorized to accept food stamps or EBT cards. About $3.3 billion of the total $21 billion worth of food stamps issued every year are issued through EBT. About 24 million people receive food stamp benefits.

While states have made progress toward issuing EBT cards some obstacles stand in the way of full electronic delivery of food stamps. The biggest hurdle is the lack of system interoperability. USDA plans to ask the public and vendors specializing in EBT systems how various state EBT systems should interoperate and how gateway fees for interstate transactions should be handled.

So far only Texas' and New Mexico's EBT systems are interoperable which means food stamp recipients can use their cards in stores that accept food stamps in either state.

In response to a recent report from USDA's inspector general other changes are in store for the program. USDA plans to develop strategies to deal with recipient fraud work with states to explore what legislation may be needed at the state level to deal with EBT-related fraud and privacy issues ensure that changes to an EBT processor's database are entered correctly into the system and develop a federal model to identify patterns of abnormal transactions and trafficking in benefits.

Some progress in these areas already has been made Keeffe said. The recently developed Retailer EBT Data Exchange system speeds the process of making changes to the states' retailer databases. Also all offices under Keeffe this year will install the Anti-Fraud Locator Using EBT Retailer Transactions (???) to identify illegal food-stamp trafficking.

Roger Viadero USDA's inspector general said he supports the use of EBT to deliver food stamps as an alternative to paper coupons and is pleased USDA plans to implement his office's recommendations. But he said the cards need more security features such as ultraviolet ink and holograms. The Secret Service a member of the National EBT Task Force recommends that biometrics such as fingerprint identification be considered.

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